Lien waivers and releases play a crucial role in managing payment processes and protecting the interests of all parties involved — whether property owners or subcontractors. But what exactly is a lien waiver? These documents remove any legal claim to received or owed payment for work or materials provided. In other words, by signing these documents, you legally sign away any claim to the payment you’re receiving. Property owners often require lien waivers and releases before issuing payments to protect themselves from a mechanics lien for money already paid.
There are two main types of lien waivers and releases: conditional and unconditional, and they can be issued at different stages of the construction project. Continue reading to learn about the four most common types of lien waivers and releases.
Conditional Waiver and Release Upon Progress Payment
A conditional waiver and release upon progress payment is a document used by subcontractors or suppliers to acknowledge that they have received partial payment for work done or materials delivered to date. However, it’s important to note that this type of waiver is “conditional” because it is only valid if the payment successfully clears the bank. In other words, the waiver is contingent upon the actual receipt of the payment. It does not cover any retention or items furnished after said date.
This type of conditional waiver protects the paying party (typically the property owner or general contractor) by ensuring that all lien rights are waived for the amount paid. It also helps the subcontractor or supplier to show that they have been paid partially and establishes transparency in the payment process. If they don’t receive payment, they will still have the right to file a lien for the owed amount.
Unconditional Waiver and Release Upon Progress Payment
Unlike the conditional waiver, the unconditional waiver and release upon progress payment is more definitive and inherently riskier. It signifies that the subcontractor or supplier has already received the progress payment in full and relinquishes any future lien or claim rights for that specific payment amount. Essentially, upon signing this waiver, the subcontractor or supplier immediately waives their right to file a mechanics lien for that amount — regardless of whether payment is actually made. However, it does not cover any retention or items furnished after said date.
Property owners and general contractors often prefer unconditional waivers as they provide absolute assurance that the payment has been settled. They also eliminate any future payment disputes or claims related to the completed work or delivered materials to date.
Conditional Waiver and Release Upon Final Payment
When a construction project nears completion, a conditional waiver and release upon final payment is used. This document, similar to the progress payment waiver, is contingent upon the actual receipt of the final payment. It ensures that the subcontractor or supplier has been paid in full for all work performed and materials supplied up until the completion of the project.
Since this waiver is conditional upon the final payment, it gives the subcontractor or supplier some level of protection, ensuring that they receive payment before releasing rights to any claims or liens.
Unconditional Waiver and Release Upon Final Payment
The unconditional waiver and release upon final payment is the most comprehensive type of waiver. It serves as a confirmation that the subcontractor or supplier has received the final payment and that all payment-related matters for the entire project have been settled.
By signing this document, the subcontractor or supplier waives any rights to file a claim or lien for any part of the completed work or materials supplied. It provides clarity and reassurance to the property owner or general contractor that the project has been paid in full and that there will be no future payment-related issues.
Free Lien Waivers & Progress Payment Releases with CNS
Construction waivers and releases are essential documents in the construction industry, ensuring smooth payment processes and protecting the interests of all parties involved. The distinction between conditional and unconditional waivers lies in the timing and certainty of payment receipt.
Whether it’s a progress payment or final payment release, choosing the appropriate type of waiver is crucial for maintaining transparency, trust, and compliance throughout the construction project. At CNS, we offer our customers FREE lien waiver forms when they send preliminary notices through us. Our generator makes the repetitive task of creating waivers and releases quick and easy by automatically populating them through our secure online database. Even if our team didn’t file your preliminary notice, you can still use our free general waiver form.
Contact CNS today to get a prelim started or file a mechanics lien.
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Disclaimer: CNS is not an attorney, and if you need legal advice, please contact one.